) to neutral from buy, and Southwest Airlines (LUV
) to reduce from neutral.
Analyst Sam Buttrick says the current fundamental industry recovery is limited to the recapture of war-lost revenue, and he sees no evidence of a broader-based recovery yet. He notes jet fuel prices are still high. He believes full-year industry profits are unlikely until 2005. He says discounters continue to gain share aggressively, but he thinks valuations are getting stretched on AAI and LUV.
For AirTran, Buttrick sees EPS of 55 cents in 2003, and 80 cents in 2004. For Southwest, he sees EPS of 36 cents in 2003, and 50 cents in 2004. He has a $13 price target for LUV, and $12 target for AAI.